L'ORÉAL : HSBC raises target, but maintains 'hold' recommendation
February 13, 2024 at 06:44 am EST
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On Tuesday, HSBC raised its target price for L'Oréal shares from €407 to €410, with the recommendation maintained at 'hold'.
Following last week's weaker-than-expected fourth-quarter results, the intermediary sees the outperformance posted by the French cosmetics group continuing, albeit at lower growth rates.
In 2024, we see a sector where L'Oréal's market share gains will remain robust, but with a less favorable price effect, which should lead to a moderation in growth", says the analyst.
HSBC adds that the share's valuation, which is at historic highs, and the limited potential for an upward revision of market forecasts should limit the share's progress.
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L'Oréal is the world leading cosmetic group. The group offers skincare products (39.9% of sales), makeup products (19.7%), haircare products (15.4%), fragrances (12.6%), hair colouring products (8.3%) and other (4,1%). Net sales break down by family of products as follows:
- consumer cosmetics (36.9%): L'Oréal Paris, Garnier, Maybelline New York, NYX Professional Makeup, Essie Niely, Dark and Lovely, Mixa, MG and Carol's Daughter brands;
- luxury cosmetics (36.2%): Lancôme, Kiehl's, Giorgio Armani Beauty, Yves Saint Laurent Beauté, Biotherm, Helena Rubinstein, Shu Uemura, IT Cosmetics, Urban Decay, Ralph Lauren, Mugler, Viktor&Rolf, Valentino, Azzaro, Prada, Takami, A?sop, etc.;
- active cosmetics (15,6%): La Roche-Posay, Vichy, CeraVe, SkinCeuticals, Skinbetter Science, etc.;
- professional products (11,3%): L'Oréal Professionnel, Kérastase, Redken, Matrix and PureOlogy brands.
Products are marketed through mass distribution and distance selling, selective distribution, hair salons and pharmacies.
At the end of 2023, L'Oréal has 37 production sites worldwide.
Net sales are distributed geographically as follows: Europe (31.6%), North America (27%), North Asia (25.9%), Asia/Pacific/Middle East/Africa (8.4%) and Latin America (7.1%).